Retail group warns of looming $1b tax hole
Consumers are avoiding paying $235 million a year in GST by buying goods from overseas websites and that figure will grow to $935m in 10 years if the ‘‘loophole’’ isn’t closed, Retail NZ says.
Retail NZ policy manager Greg Harford said its estimate didn’t take into account the possibility that shipments by Amazon to New Zealand could increase once Amazon sets up distribution centres in Australia within the coming year.
Amazon shares climbed above US$1000 (NZ$1400) for the first time this week, having risen by more than a third in the past year.
Harford said there was ‘‘chatter’’ among Kiwi retailers about its arrival into Australia.
‘‘Having it closer to the New Zealand market really does mean New Zealand retailers need to have a close look at their businesses and work out what they can do to differentiate and compete wherever possible.’’
The lobby group has been appealing for the Government to change the rules that allow people to buy many items costing than less $400 online from overseas without GST.
The threshold is lower for some goods such as clothes and shoes that can also attract duty.
Harford said New Zealand retailers’ share of online spending had dropped from 65 per cent to 55 per cent over the past four years, in part because of the uneven playing field on GST.
The trend would continue as the retail market became ‘‘increasingly globalised and increasingly dominated by large global firms’’, Retail NZ told members.
A spokeswoman for Customs Minister Tim Macindoe said on Tuesday that a report from Customs on options to change the taxfree threshold was ‘‘imminent’’.
But Retail NZ has been pushing for the Government to do away with tax-free internet shopping by requiring foreign companies to collect GST when they sell goods to New Zealanders.
Harford said that even if only the largest 100 foreign retailers complied, that would mean GST would be collected on at least 98 per cent of overseas purchases.
The Australian Government had planned to require foreign companies to levy GST on online purchases from July, but its Senate has recommended delaying that by a year.